Treatment Plant Plan Is Derailed By Judge

Firm With Lower Bid For City Waste Project Gains Temporary Win

A McHenry County judge issued a temporary restraining order Tuesday against the City of Crystal Lake, halting a multimillion-dollar waste-water treatment plant project.

Joseph J. Henderson & Sons, Inc. sued the city Friday, three days after council members awarded a $14 million contract to another construction firm, Elgin-based Seagren/Shales Inc., despite the fact the Henderson company's bid was $245,200 lower.

Michael Coppedge, city attorney, said the restraining order could upset the time line for receiving a state loan to fund the expansion project.

"I think it might already be sunk," Coppedge said.

Associate Judge Michael Caldwell ordered a halt to the planning and construction process until Monday, when he will hold a hearing on whether to order a stop to the project until the suit is resolved.

The news Tuesday was not all good for the Henderson company. In his ruling, Caldwell said the temporary restraining order would go into effect only after the construction company puts down a $10 million bond, or a $7 million bond backed by a bond company. If a judge later rules the city lost money improperly because of the restraining order, Henderson could be liable for those losses.

"I have grave concern about the adequacy of this complaint . . . but I am going to issue the restraining order," Caldwell said.

John Henderson, son of the company's founder and the firm's lawyer, said such damages would be unlikely. He also said his company would submit the bond no later than Wednesday.

Henderson's attorneys believe the city has unfairly bypassed low-bid principles. State law generally requires municipalities to accept the lowest bid on major projects, in large measure to guard against cronyism.

"This is something that could affect a lot of companies," attorney Donna Henderson said. "And this isn't something just for us. The city taxpayers stand to save $245,000."

Coppedge argued at Tuesday's hearing that there was ample legal precedent that gives local governments wide discretion in determining who is a qualified bidder.

Crystal Lake Mayor Aaron Shepley disputes the notion that the Henderson company is being excluded because of an employee, former Councilman Roy "Buddy" Nystrom. Henderson's development director, Nystrom is facing official misconduct charges for allegedly using his position on the council to get city business for Henderson.

However, Shepley said Henderson was denied the bid because the company had an improper relationship with the engineering firm that oversees the project.

City officials claimed the Henderson company and the engineering firm, Baxter & Woodman, were involved in a joint venture, Baxter and Woodman LLC.

Both companies have denied any joint venture in court papers, although the engineering firm said it has provided the construction company with support staff on projects they have worked on together.

City officials believe the suit will force them to miss a March 31 deadline to turn in loan paperwork to the Illinois Environmental Protection Agency.

"The lawsuit itself doesn't bother me," Shepley said. "I'm comfortable with the decision we made. What bothers me is that the lawsuit may ruin our chances of receiving the state loan."